OFFICE OF THE A-I-T’ORNEY GENERAL OF TEXAS 

AUSTIN 

a. Wallace Rughston, Direator 

Uotor Transpoxtation Division 

Railroad CoMlission of Texas 

AuatLn, Texas 

Dear Xx. EUghetOnI 

YOU inquire whether 

is a mtojc carrier. subfeot t 

road Commlsslon under the Tell 

911b, V. A. G. g. 

any of Brownwood 

ne of the Rallier Aot, Article 

t the lnroraEtion 

oanrere,noe and 

way, counsel for The 

youx request, I sqbtit 

otenent of our fjndings 80 far 

"1. As to the partloular case riled at 

Dayton, Texas, on Way 13, 1943, against D. Vaughan, 

driver of a truok owned by the Butane Co., of Brownwood, Texas, our Fnveatigatioa dlsoloses the following: 

"a. 2265 gallons of oommerolal butane WEB 

transported from Baytown, Texas, to Port Arthur, Texas. 

A copy of the Railroad Commission of Texas Motor Vehicle idanifest taken from the files of the Gil and Gas 
Division of the Railroad Co.:lmissfon of Texas office 

at Houston, S~OOWS the shipper of this cargo to have 

been EU~FJ!J~CJ oil and Refining Co., Daytown, Texas, and 

the consignee of the shipment to have been the White 

Gas Co,, Port Arthur, Texas, aad that shipment was 

s&e by truck owned by the Butane COQWUW Of BZXYWwood, Texas, driven by D. vaughan. 

"b, an examination of the records of the 

White Gas %o., Port Arthur, Texas, show that this load 

of Butane was purchased by the Pmite Gas CO. iroi%I 

Anchor Petroleum Corporation of Tulsa, Oklahoma, and 

that payment $or same was made to the Anchor Petroleco., of Tulsa, Oklahoma, lndioating to us that The 

Butane Compxq of Browlwood, Texas, was not involved 

fn the transaction ln any maauer except as the tz%mvportation agent. 

"2. The same facts as to cmirests, ooatraots, 

purchases and agmenta apply to a number of other cases 

lnvolvlug the s anuers Butane Gas Coupany of Houston; 

Winton Automtic Gas Oompany, Denumnt, Texas; Automatis 

Gas Co., 

Petroleum Oorporatioti, Pasadena, Texas. 

of Beauuont, Texas; and the Crown Central 

"'3 . The records of the Geir-Jaokson Reoycll.~.~g Plant at Grapelaud di'sclose that the entire 

output af this plant is oontraated to the Anohor 

Petroleum Co., Tulsa, Oklahoma, andthata largemajmlty qf the gas from this lant is transported to 

the Gulf Gil Oorporattoon at % art Arthur, Texas, in 

trucks owned by The Dutaue Company of Brownwood, 

Mr. Blgglnbotham, of the Gulf Oil Corporation, advised 

one of our inspectors that they had a contract with the 

Au&or Petroleum Company, Tulsa, Gklahowa, for the gas 

from Geir-Jaokson Reoyoling Plant and did not.kaow,the 

Butane Company in aonneation with the oontraot. He 

farther stated that the Gulf Oil Corporation is invoioed by the drnohor Petroleum Company and that suoh 

invoice8 are paid to the Author Petroleum Company. 

"4. One of our lcspectore has ohecked the reoords 

of the Distillate Production Corporation aud these disclose 

a contract by and between Distillate Produotion Corporetion 

aad the knehor Petroleum Corporation, wherein it is oontraoted 

that Distillate Produetlon Corporation agrees to sell and deliver to Anohor Petroleum Corporation from Distillate Produotiou Corporation tanks at the loading dook Into tank trucks 

to be rurnlshed by mahor Petroleum aorporatiou. Produots uuder this aontract are being delivered by The Butane Company of 

Drownwood to the Crown Central Petroleum Corporatiou ate Pass- 
dena, to storage of that corporation. 

"5. In the reoords of the Cistillate Productlon Corporation, our inepeotor examined a letter addressed by the An&or Petroleum Corporation to Distillate 

Production Corporation whioh read aa follows: 'As to 

trucking equipment for Liquefied Gas Products, we believe that our company owna or has more equipment available 4 

than any other concern. This equipment includes one large 

new propane transport, having a working pressure of 200 lbs. 

and a capacity of 4,000 gallons whioh we contemplate using. 

Our trucking faoilities together with those of a large 1 

truoking ooacern In the State of Texas, with whom we 

have a close working arrangement, approximate 75,000 

gallon capacity.' 1 

"6. The Anchor Petroleum Corporation is 

an Oklahoma Corporation and has a permit to do buslnesa in Texas. Nothing in the files of the Seoretary 

of State's office show any oonneotlon between the 

Anohor Petroleum Corporation and The Butane Go., 

of Prownwood. 

"7. The charter of the Butane Company of 

Brownwood has been cancelled aooordlng to records of 

the Secretary of State. 

"In conolusion, our investigation disoloses 

that the produote transported by The Butane Company 

of Brownwood are produots that have been purohased 

from various oonoerna by the Anchor Petroleum Corporation, that the purchasers of these producta are invoioed by the Anohor Petroleum Corporation, and that 

payment is made to the Anchor Petroleum Corporation. 

The manifests covering these truck shipments are made 

by the produoer to the Anchor Petroleum Corporation 

and that the Butane gempang of Brawnwood la not known 

;r*r$$ognized other than a8 the transportation agent. 

Mr. Holloway has made tha following explanation 

of the activities of The Butane Company and the Anohor Petroleum 

Company, its associate I 

Mr. Thurman Cole does business under the name 

of The Butane Company and is engaged in buying, selling and 

transporting Butane gas. A few years ago when he entered this 

business butnne g.28 was a by-product of oil refineries; its 
952 , 

k&c. irallace Hoghston, page 4 

production was irregular and the de,mnd therefor fluctuated 

with the weather. At times the refineries would have a surplus 

and would shoot it into the alrl an other occasions, when a 

local distributor would send his truck for a load the refinery 

would have none. Mr. Cole by oontracting la advanoe with a 

large number of refineries and securing the business of a large 

number of looal dealers, haa been able to spread supply and de- 

-% aranteeing to refiners minimnm sales and to local dealers 

a rega r ar eapply. 

The Butane Company has storage in several West Texas 

towns and in others. It sells to dealers having their own 

storage. The prioe to the oustomers is based on the oost of 

the product to The Butane Oompany plus the cost of transportation, whioh varies with the distance. Whenever the local dealer 

sends his own truck to the refinery ror gas, which he buys through 

The Butane Company, he raoeives a reduction in prioe based upon 

the company's saving on the oost of transportation. 

The foregoing operations are oarried on by The Butane 

Company by itself+. 

JOIWT OPBBATICMS OF TBB BUT&BE COYPhBY ABD TBE 

kblCIiOB mJ!RoLETJbi couipANy 

In addition to the business oar&d on by The Butane 

Company in West Texas, it also carries on an extensive business 

jointly with the anchor Petroleum Company, an Oklahoma oorporation with a permit to do bueineas in Texas. Principally, this 

business is earried on in this way: 

Xr. Baten, for and in the name of Anchor Petroleum 

Gontpany, oontraots ror the purchase or butane from a refinery 

and, usually later, for its sale to a dealer. The oontraot la aotually for the joint aooount of Anohor and The Butane Company, but 

only the natae of the Anohor Petroleum Company la known to the refiner and the dealer. Anohor operates no butane trucks in Texas; 

The Butane Company operates ao!ne thirty suoh truoks. All expenses 

of the transections suoh as ooste, purohase, sale, and tranaportaMan, are kept in a joint aoooant. The total expenaae are deduoted from the reoeipts from sales and the resulting prorit or 

loss is equally shared. Sometimes hr. Cole of The Butane Company 

doea the buying himself. In either event, the oontraot ror the 

purohase or sale is entered into by Anchor or The Butane Company 

only after securing the advioe and oonsent of its assooiate. Suoh 

approval is usually given by long distance telephone. The telephone bill of The Butane Company runs $300 or $400 per month. 
Storage tanks are awned jointly by the aonfederates at aaveral points, while other storage facilities are 

owned by one aompany or the other. kiowever, as far as the joint 

acoount is coaoerned all plants are owned and operated by the 

joint amount. 

An exception to the procledure of aeouring advance approval or both associates for eaoh contract appears to 

exist in Laredo where the superintendent of the jointly operated 

teraina~l makes sales without aeouring separate approval ror eaah 

traaaaotion. 

faota The Butane 

hire. If it is, 

The question is whether under the foregoing 

Company isoperating trucks for compensation or 

it is a motor carrier. 

, 

Counael for The Butane Company bases his contention that it is not a atotor carrier upon the following parts 

or the Texas Motor Carrier Act, V. A. C. s., Article Bllb, Seatlon la: 

"(1) Provfded, however, that the term 

'Mctor Carrier’ and the term 'Contract Carrier' 

as defined in the preceding seotlon shall not 

be held to lnolude: 

ll+ * * 

“(a) Where merely inoidental to a regular, 

separate, fixed and established business, other 

than a transportation bwiness, the transportation 

of eaployeaa, petroleam produots, and lnoidental 

supplies used or aold in oonneetion with the wholesale or Istail sale of suoh petroleum products from 

the refinery or place of production or plaoe of 

storage to the plaae of storage or place of sale 

and distribution to the ultimate consumer, in a 

motor vehicle owned and used exaluaively by the 

marketer * * *- 
hlr. tiailaoe Hu+iton, p:ige 0 

In our view, transportation of butane for 

the joint aoaount ia not "merely inoidental to a regular, 

separate, fixed and established b-other than a transportation bueInesaX" If the traneportation for the joint 

aoeount were iaolated, oocaslonal, Irregular, oaeual and desultory, 

(~otatlo~. 125 A. L. R. MB), The Butane Company might not be 

aoting am a carrier) but where,.ae here, it employi some thirty 

trucks latenaively in transporting for the joint undertaking, 

where auah business ie so extensive as to require several hundred dollars telephone ealle a month for the ooordlnation of 

the operation of the two oompanie.e, wa are impelled to the view 

that the transportation ie not "merely Inoidental" to a bueine8s "other than a transportation business" but that as to the 

joint operation the principal businese OS The Butane Company 

is that 0r transportation. 

In our view the transportation la for compensation, notwithstanding the tact that the extent of the remuneration is uncertain and oontlngent upon profits. IP the opposite 

were true, a truak operator might engage to transport for any 

number OS ooncerna and, be free of the supervision of the Rallroad Co~uslon as long a8 hIa uoapenaation wae a percentage 

or aontingent proffta. This would utterly destroy all attempt@ 

or the State to maintain uniform freight rates. 

Counsel for The Butane Company haa also suggested 

that The Butane Company may fall within ,the statutory exoeption, 

rea(lingt 

*(d) Any utility aompany asing ita own 

equipment transporting Its own property over the 

highwaya." 

:

I 

Pretermitting the question of whether It la a utility, The Butane 

1 

~ 

Company doee not fall within this reotlon, for In the joint operatlon it doee not own the gas if transports, but at best has 

an ondivided intereet therein. 

(a) 

This laok of ownership prevents 

hi8 falling within eroeptfon of the eame subseotlon. ‘I 

It Is our opinion that you aoted properly 

In filing a complaint against the driver of The Butane Com- 
. . 

&?r. tie.llace Hughston, page 7 

i pany for operating uuithout a permit from the Railroad ComtiSSiOL 

Our opinion file contains additional lnformation on the aatlritiee of these aompanies. Kindly 

aaU on us if you require it. 

Yours very truly, 

Al'T-ORNEYGENERAL0FTEXAS 

BY